Mexicoâ€™s Missing Marijuana Mystery

Every year, soldiers roam Mexico’s hinterland in search of illegal marijuana plots. Massive eradication campaigns have been part of Mexican life since the 1940â€™s. No other country on Earth has impounded so much cannabis for so many years.

That could be changing. According to recent official numbers (p. 51), marijuana seizures and eradication declined steeply in 2013, to lows unseen since the early 1990â€™s. Does this signal a major policy shift? Maybe. Here are the facts:

Between 1995 and 2012, marijuana seizures averaged 1631 metric tons per year. In 2013, the total haul was 972 tons, 40% below the historical average. Even more surprising, less than half of the impounded volume was captured in the second semester (Note: I estimated second semester numbers by looking at this, p. 34). Traditionally, marijuana seizures are heavily concentrated in the months of October and November, right after the crop. Somehow, that did not happen in 2013.

Eradication numbers are even more striking. From 1995 to 2012, Mexican authorities destroyed an average of 24,120 hectares (59,601 acres) of marijuana plots per year. In 2013, only 5,364 hectares (13,254 acres) were eradicated, almost 80% below the historical norm. And again, not much seems to have happened in the second half of the year, i.e., the prime months for marijuana eradication.

So what explains those less than impressive results? There are three distinct possibilities:

Creeping legalization in the US could be hampering demand for Mexican marijuana. This, of course, is the preferred explanation for those in the legal pot trenches and has actually appeared in the pages of the Washington Post. It is not an absurd claim. A 2010 RAND Corporation report estimated that, under certain conditions, legalized cannabis produced in California would be cheaper than Mexican commercial grade marijuana everywhere in the continental United States, except for Texas and New Mexico. In 2012, Mexican think tank IMCO reran the numbers for Colorado and Washington and came to the same conclusion (Disclosure: I was a co-author of that report). Indeed, over the long run, legal domestic supply sources will tend to displace Mexican marijuana. But that is probably not happening just yet. In both Colorado and Washington, a combination of regulatory restrictions and high taxes has maintained legal marijuana prices above black market prices. And in both cases, the new legal recreational market started operating in 2014, so it can hardly explain directly what happened in Mexico in 2013. However, some signaling effects could be at work. The prospect of intensified competition in the US market could have led some producers to change crops or reduce the surface dedicated to marijuana. That proposition, however, is extremely hard to test.

The Mexican government might have opted for reduced enforcement. Over the past two years, the number of troops committed to the fight against organized crime has declined from 50,000 to 32,000, most of them deployed in areas with little or no marijuana production (e.g., Tamaulipas). Moreover, over the same period, the army halved the number of permanent checkpoints in roads and highways. That could potentially account, at least partially, for the reduction in seizures and eradicated surface. However, militating against that idea is the marijuana-specific nature of the decline. Opium poppy eradication continued apace: the 2013 total was less than 10% below the 1995-2012 average (p. 51). Likewise, the heroin seizure total was the third highest on record. The volume of impounded cocaine actually grew (albeit from a very low base). If there was a decision to dial down drug enforcement, maybe as a tool to reduce violence, why focus exclusively on marijuana? Why not extend that policy to all other major drugs? No good answer there.

The marijuana crop might have suffered from adverse weather conditions. Mexicoâ€™s northwestern states (i.e., the countryâ€™s prime marijuana-producing region) went through a severe drought in 2013. In the summer months, the Mexican government issued a natural disaster decree and channeled emergency relief funds to the state of Sinaloa (home base of the equally named cartel). The Sinaloa corn crop declined by a quarter and tomato production by a third. Did a similar fate befall marijuana? It is at least possible: given the illegal nature of the plant, few marijuana producers have access to modern irrigation techniques, making them extremely vulnerable to a dry spell. In brief, Mother Nature might have done part of the job usually performed by soldiers.

Bottom line, Mexico is probably not bolting from the war on drugs. Not just yet, at least. Freakish weather is a better explanation to the Mexican marijuana mystery than either piecemeal legalization in the US or a major shift in counternarcotics policy. But if a year does not a trend make, two in a row might. If there was no rebound in seizures and eradicated surface in 2014, market and policy explanations would become far more plausible (we will know in September). And either one would point to momentous change in Mexicoâ€™s long (and mostly futile) battle against the marijuana trade.

PS: I want to thank Mark Kleiman and Keith Humphreys for allowing me to guest post at the RBC. It is a great privilege to be in such distinguished company, writing for such an amazing group of readers. Hopefully, this will be the first of many collaborations on Mexican security and politics.

Comments

What a fascinating piece. I wonder about cross-overs in competition for the marijuana market. Clearly, commercial grade U.S. pot in the 4-6% THC range competes pound for pound with Mexican pot. There could also be another type of competitive pressure which is U.S. put users for whom sinsemilla has been just a bit too expensive, and when its price falls as it is now they leave the commercial grade market entirely.

What a fascinating piece. I wonder about cross-overs in competition for the marijuana market. Clearly, commercial grade U.S. pot in the 4-6% THC range competes pound for pound with Mexican pot. There could tough be another type of competitive pressure which is people for whom sinsemilla is just a bit too expensive, and when it's price falls they leave the commercial grade market entirely.

As I resident of both Colorado and Mexico, I offer two anecdotal and completely unstatistical personal observations:

1) You say that black market Mexican weed is still cheaper than Colorado legal weed. Since medical marijuana went into effect, it has been virtually impossible to find weed "on the street". The black market has been buying from medical cardholders, at their cost or cost-plus. Currently the prices of weed of a much better quality than Mexican commercial are running $79-$99. Top-shelf stuff is still pricey, but pungent green seedless and stemless pot can be had for less than $100 per ounce. I know a whole lot of smokers up there, and I haven't heard of any buying Mexican in four or five years. And why would they?

2) Marijuana consumption in Mexico has soared among the younger generation. Nobody used to smoke here (I live in a large central Mexican city), and it was very difficult to find weed. Now I know a number of 20-somethings who do, and finding pot is trivially easy. So there may be some correlation with a larger domestic market…..much of the eradication effort may have been targeting weed heading north, simply to appease the American government……if they can sell more at home, perhaps there's more looking the other way on the part of officials. That logic doesn't even convince me, but it certainly seems as though domestic use has burgeoned, and there may be some relationship.

1. Your anecdotal take on Colorado might be true, but that still does not explain the precipitous drop in Mexican marijuana seizures and eradication. For Colorado weed to compete nationally with Mexican imported MJ, retail prices would have to fall to a point near the wholesale import price, i.e., btw 800 and 1000 dollars per kilo. That is equivalent to 23 to 28 dollars per ounce. Even accounting for differences in THC content, we are probably still far from that point (and that is why, there is likely not much diversion yet from CO to third states).

2. Yes, Mexican domestic MJ consumption has probably grown significantly over the past few years (we don't know for sure since the last national drug use survey was conducted in 2011). But arguably that would lead to increased production, not a significant drop.

Alejandro, thanks for this analysis. Wouldn't one possible response to your question as to why the Mexican govt might have dialed down enforcement around marijuana that (1) it's not as lucrative and key to cartel income as opium, which is clearly on the rise and (2) given that they have fewer people, that have to make choices somewhere so (3) let's go with the choice that addresses (1) and probably, even though they might not say so publicly, also coincides with where US drug enforcement authorities would prefer they place their priorities.?

Of course, the simplest argument is that marijuana is no longer the cash crop it once was in Mexico (and we can argue why), so there's simply less cultivation — thus less erradication and fewer seizures. One of our journalist friends in common reported that over a year ago, that is, the precipitous price drop of marijuana at the level of the producer.